Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — Q4 2022 Earnings Presentation
29 slides from Federal Agricultural Mortgage's earnings presentation, Feb 24, 2023
Slide 1: Equity Investor Presentation Fourth Quarter 2022
Equity Investor Presentation Fourth Quarter 2022
Slide 2: Forward-Looking Statements
FARM ER M AC Forward-Looking Statements In addition to historical information, this presentation includes forward- looking statements that reflect management’s current expectations for Farmer Mac’s future financial results, business prospects, and business developments. Forward-looking statements in
Slide 3: Use of Non-GAAP Financial Measures
FARM ER M AC Use of Non-GAAP Financial Measures This presentation is for general informational purposes only, is current only as of December 31, 2022 and should be read in conjunction with Farmer Mac’s Annual Report on Form 10-K filed with the SEC on February 24, 2023. In the accompanying analysis o
Slide 4: Investment Highlights
FARM ER M AC Investment Highlights •90-Day delinquencies of only 0.17% across all lines of business •Cumulative Agricultural Finance Mortgage Loans lifetime losses of only 0.11%Quality Assets •Issue at narrow, Government Sponsored Enterprise (GSE) spreads to U.S. Treasuries •E.g., 10-year U.S. Treas
Slide 5: A Mission-Driven, For-Profit Company
FARM ER M AC Farmer Mac initially chartered by Congress as an instrumentality of the United States Initial public offering First listed on NASDAQ (FAMCU & FAMCL) First major charter revision and expansion of authority (direct loan purchases) First listed on NYSE (AGM & AGM.A) Second major charter re
Slide 6: Executive Leadership
FARM ER M AC Aparna Ramesh Executive Vice President – Chief Financial Officer & Treasurer • 20+ years of experience in mission-oriented finance roles • Joined Farmer Mac in January 2020 from Federal Reserve Bank of Boston, where she previously served as Senior Vice President and Chief Financial Offi
Slide 7: U.S. Agricultural Balance Sheet
FARM ER M AC U.S. Agricultural Balance Sheet 07 Investments, $132,748,868 Inventories, $204,517,960 Real Estate $3,188,219,412 Machinery & Vehicles, $322,698,486 $3,848,184,726 Real Estate, $349,067,861 Nonreal Estate, $154,826,805 $503,894,666 $0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,00
Slide 8: Central to a Large Agricultural Mortgage Market
FARM ER M AC (FCS Secondary Market GSE) Agricultural Finance Line of Business (Farm & Ranch and Corporate AgFinance) Farm Credit System (FCS) (Cooperative GSE) • Four FCS Banks • 69 Retail Agricultural Credit Associations Central to a Large Agricultural Mortgage Market 08 Agricultural Mortgage Marke
Slide 9: Farmer Mac's Operating Model
FARM ER M AC Farmer Mac’s Operating Model 09 Farmer Mac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees Operating model excludes
Slide 10: Securitization Program Update and Growth Opportunities
FARM ER M AC Securitization Program Update • Closed $299.4 million agricultural mortgage-backed securitization transaction on Oct. 14, 2021 • Closed $301.1 million agricultural mortgage-backed securitization transaction on Aug. 11, 2022 • Closed $283.6 million agricultural mortgage-backed securitiza
Slide 11: Lines of Business
FARM ER M AC Line of Business Segment Spread Income Products Fee Income Products Volume ($ IN BILLIONS) Q4 Net Effective Spread (%) Agricultural Finance Farm & Ranch • Loans • AgVantage Securities • Guaranteed Securities • USDA • LTSPCs • Guaranteed Securities • Loans Serviced for Others $17.7 0.98%
Slide 12: Agricultural Finance Loan Portfolio Diversification
FARM ER M AC Northwest 13% Southwest 31% Mid-North 26% Mid-South 17% Northeast 4% Southeast 9% By Geographic Region Crops 50% Permanent Plantings 22% Livestock 18% Part-time Farm 5% Ag. Storage and Processing 5% By Commodity Type Agricultural Finance Loan Portfolio Diversification 12 AS OF DECEMBER
Slide 13: Treasury/Investments Segment
FARM ER M AC Treasury/Investments Segment Treasury segment includes the financial results of the company’s funding, liquidity, and capital allocation strategies and operations. Liquidity & Investment Portfolio Maintain investment portfolio to provide back-up source of liquidity in excess of regulato
Slide 14: Growing, Recurring, High-Quality Earnings
FARM ER M AC $151.2 $168.6 $197.0 $220.7 $255.5$84.0 $93.7 $100.6 $113.6 $124.3 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 2018 2019 2020 2021 2022 C O R E EAR N IN G S $ IN M ILLIO N S N ET E FF EC TI VE S PR EA D $ IN M IL LI O N S Net Effective Spread & Core
Slide 15: Quality Earnings Drives Strong Dividends
FARM ER M AC Quality Earnings Drives Strong Dividends $0.05 $0.10 $0.12 $0.14 $0.16 $0.26 $0.36 $0.58 $0.70 $0.80 $0.88 $0.95 $1.10 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 $ PE R S H AR E Quarterly Dividend per Common Share 15 Increa
Slide 16: Proven, Rigorous Underwriting
FARM ER M AC Losses less likely even in default – Average portfolio LTV of 46% as of December 31, 2022 – Land values need to decline >54% to generate material losses across Agricultural Finance mortgage loans portfolio – “Stress scenario” losses of 17% to 48% – 1980s crisis saw land value declines o
Slide 17: Credit Consistently Outperforms
FARM ER M AC Credit Consistently Outperforms 17 0.74% 0.41% 0.17% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 90-Day Delinquencies Industry 90-Day Delinquencies Farmer Mac 90-Day Delinquencies (Agri
Slide 18: Historical Credit Losses
FARM ER M AC Historical Credit Losses Agricultural Finance Mortgage Loans have historical cumulative losses of 0.11%, or less than 1bp per year • Cumulative Agricultural Finance Mortgage Loan losses of $38 million on $35 billion of cumulative Agricultural Finance Mortgage Loans historical business v
Slide 19: Allowance for Losses – Quarterly
FARM ER M AC Allowance for Losses – Quarterly 19 The total allowance for losses increased $1.9 million to $17.2 million in fourth quarter 2022 • $0.6 million release to the allowance for the Rural Infrastructure Finance portfolio was primarily due to updates to the timing of expected future cash flo
Slide 20: Strong and Growing Equity Capital Base
FARM ER M AC $619 $681 $714 $806 $197 $331 $497 $517 $815 $1,012 $1,210 $1,323 12.9% 14.2% 14.8% 14.9% -2.0% 3.0% 8.0% 13.0% 18.0% 23.0% 28.0% 33.0% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2019 2020 2021 2022 TI ER 1 C AP IT AL R AT IO (% ) C O R E C AP IT AL $ IN M IL LI O N S Statutory Minimum
Slide 21: Investment Highlights
FARM ER M AC Investment Highlights •90-Day delinquencies of only 0.17% across all lines of business •Cumulative Agricultural Finance Mortgage Loans lifetime losses of only 0.11%Quality Assets •Issue at narrow, Government Sponsored Enterprise (GSE) spreads to U.S. Treasuries •E.g., 10-year U.S. Treas
Slide 22: Appendix
Appendix Financing Rural America
Slide 23: Key Company Metrics
FARM ER M AC • Core earnings, core earnings per share, and net effective spread are non-GAAP measures. For more information on the use of these non- GAAP measures, please see page 3. For a reconciliation of core earnings to GAAP net income attributable to common stockholders and core earnings per sh
Slide 24: Equity Capital Structure
FARM ER M AC Equity Capital Structure 24 NYSE Ticker Dividend Yield Shares Outstanding C O M M O N ST O C K CLASS A VOTING COMMON STOCK • Ownership restricted to non-Farm Credit System financial institutions AGM.A 4.12% 1.0 million CLASS B VOTING COMMON STOCK • Ownership restricted to Farm Credit Sy
Slide 25: Funding
FARM ER M AC Funding Finance asset purchases with proceeds of debt issuances • 32 dealers • Match-funding provides for stable net effective spread and immaterial interest rate risk Farmer Mac’s debt securities carry privileges for certain holders • 20% capital risk weighting • Eligible collateral fo
Slide 26: "Demand Pull" Provides Sustained Growth Opportunity
FARM ER M AC World population is expected to grow to 9.8 billion by 2050 • Arable land per person is expected to decline over 40% from 2005 to 2050 USDA projects a 75% increase in total production and consumption of major field crops in the same period • 43% increase in world population • Higher pro
Slide 27: Reconciliation of Net Income to Core Earnings
FARM ER M AC Reconciliation of Net Income to Core Earnings 27 (in thousands) 2022 2021 2020 2019 2018 Net income attributable to common stockholders 150,979$ 111,413$ 94,904$ 93,650$ 94,898$ Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes 13,495
Slide 28: Reconciliation of Net Interest Income to Net Effective Spread
FARM ER M AC Reconciliation of Net Interest Income to Net Effective Spread 28 2019 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield 270,940$ 1.04% 221,951$ 0.94% 195,848$ 0.87% 173,135$ 0.87% 174,436$ 0.96% Net effects of consolidated tru
Slide 29: Resources
FARM ER M AC Resources Footnote 1: USDA Economic Research Service year end 2021F balance sheet (https://data.ers.usda.gov/reports.aspx?ID=17835). Farm Sector Assets and Farm Sector Debt values are forecasted values for 2021 from USDA Economic Research Service. Footnote 2: Eligible ag real estate mor
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